Annual inflation cooled more than expected as the holiday season kicked off, according to the U.S. Bureau of Labor Statistics’ (BLS) belated monthly inflation report.
Inflation data hadn’t been released since October because of the 43-day federal government shutdown that began Oct. 1. The October CPI report was canceled because the BLS couldn't retroactively collect the data.
The consumer price index (CPI) increased 0.2% on a monthly basis on a seasonally adjusted basis over the two months from September to November and rose 2.7% year-over-year, the BLS reported Dec 18. That’s below economists’ forecasts, and follows the 0.3% monthly rise in September and the month's annual inflation rate of 3%.
Core inflation, which excludes volatile food and energy prices, was also cooler than anticipated, rising 0.2% over the past two months ending in November and 2.6% annually.
The increase in inflation is mild, said Justin Ladner, senior labor economist at SHRM, and annual inflation rates “remain relatively low by historical standards.” But inflation still remains above the Federal Reserve's 2% inflation goal.
Importantly, Ladner said the data, which “signals that inflation is holding steady while the labor market and broader economy are showing strong signs of cooling, will elevate stagflation fears.” The latest jobs report from the BLS, also released this week, found that U.S. employers reported adding 64,000 jobs in November and the unemployment rate rose to 4.6%, the highest point in more than four years.
A ‘Heavy Grain of Salt’
Still the inflation report should be taken with a “heavy grain of salt,” Ladner cautioned, because the government shutdown and Thanksgiving holiday significantly reduced the window during which November data could be collected. “This could significantly impact data quality, and will definitely eliminate the month-over-month inflation information that usually features prominently in the BLS CPI data,” he said.
Regardless of the murky inflation picture, other data finds that financial well-being is still taking a hit, in part because of continued elevated cost of living. Recent data from Bank of America found that 47% of workers feel financially well off, down from 52% at the start of the year. And 41% of Americans said they planned to spend less for the holidays this year, 6 points higher than a year ago, according to a CNBC All-America Economic Survey.
Real Earnings
Meanwhile, real average hourly earnings for all employees increased 0.8% from November 2024 to November 2025, seasonally adjusted, the BLS reported separately today. This result stems from an increase of 3.5% in average hourly earnings combined with an increase of 2.7% in the CPI.
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